diff --git a/collects/scribblings/guide/arith.rkt b/collects/scribblings/guide/arith.rkt
new file mode 100644
index 0000000000..64999d533d
--- /dev/null
+++ b/collects/scribblings/guide/arith.rkt
@@ -0,0 +1,48 @@
+#lang racket
+(require syntax/readerr)
+
+(provide read read-syntax)
+
+(define (read in)
+  (syntax->datum (read-syntax #f in)))
+      
+(define (read-syntax src in)
+  (skip-whitespace in)
+  (read-arith src in))
+
+(define (skip-whitespace in)
+  (regexp-match #px"^\\s*" in))
+
+(define (read-arith src in)
+  (define-values (line col pos) (port-next-location in))
+  (define expr-match 
+    (regexp-match 
+     #px"^([a-z]|[0-9]+)(?:[-+*/]([a-z]|[0-9]+))*(?![-+*/])"
+     in))
+
+  (define (to-syntax v delta span-str)
+    (datum->syntax #f v (make-srcloc delta span-str)))
+  (define (make-srcloc delta span-str)
+    (and line
+         (vector src line (+ col delta) (+ pos delta)
+                 (string-length span-str))))
+
+  (define (parse-expr s delta)
+    (match (or (regexp-match #rx"^(.*?)([+-])(.*)$" s)
+               (regexp-match #rx"^(.*?)([*/])(.*)$" s))
+      [(list _ a-str op-str b-str)
+       (define a-len (string-length a-str))
+       (define a (parse-expr a-str delta))
+       (define b (parse-expr b-str (+ delta 1 a-len)))
+       (define op (to-syntax (string->symbol op-str)
+                             (+ delta a-len) op-str))
+       (to-syntax (list op a b) delta s)]
+      [else (to-syntax (or (string->number s) 
+                           (string->symbol s))
+                       delta s)]))
+
+  (unless expr-match
+    (raise-read-error "bad arithmetic syntax" 
+                      src line col pos 
+                      (and pos (- (file-position in) pos))))
+  (parse-expr (bytes->string/utf-8 (car expr-match)) 0))
diff --git a/collects/scribblings/guide/dollar.rkt b/collects/scribblings/guide/dollar.rkt
new file mode 100644
index 0000000000..aac944fe70
--- /dev/null
+++ b/collects/scribblings/guide/dollar.rkt
@@ -0,0 +1,41 @@
+#lang racket
+(require syntax/readerr
+         (prefix-in arith: "arith.rkt"))
+
+(provide (rename-out [$-read read]
+                     [$-read-syntax read-syntax]))
+
+(define ($-read in)
+  (parameterize ([current-readtable (make-$-readtable)])
+    (read in)))
+
+(define ($-read-syntax src in)
+  (parameterize ([current-readtable (make-$-readtable)])
+    (read-syntax src in)))
+
+(define (make-$-readtable)
+  (make-readtable (current-readtable)
+                  #\$ 'terminating-macro read-dollar))
+
+(define read-dollar
+  (case-lambda
+   [(ch in)
+    (check-$-after (arith:read in) in (object-name in))]
+   [(ch in src line col pos)
+    (check-$-after (arith:read-syntax src in) in src)]))
+
+(define (check-$-after val in src)
+  (regexp-match #px"^\\s*" in)
+  (let ([ch (peek-char in)])
+    (unless (equal? ch #\$) (bad-ending ch src in))
+    (read-char in))
+  val)
+
+(define (bad-ending ch src in)
+  (let-values ([(line col pos) (port-next-location in)])
+    ((if (eof-object? ch)
+         raise-read-error 
+         raise-read-eof-error)
+     "expected a closing `$'"
+     src line col pos
+     (if (eof-object? ch) 0 1))))
diff --git a/collects/scribblings/guide/five.rkt b/collects/scribblings/guide/five.rkt
new file mode 100644
index 0000000000..4bfac4fa13
--- /dev/null
+++ b/collects/scribblings/guide/five.rkt
@@ -0,0 +1,6 @@
+#lang racket/base
+
+(provide read read-syntax)
+
+(define (read in) (read-string 5 in))
+(define (read-syntax src in) (read-string 5 in))
diff --git a/collects/scribblings/guide/guide.scrbl b/collects/scribblings/guide/guide.scrbl
index c0f41600dc..998e8bdfdf 100644
--- a/collects/scribblings/guide/guide.scrbl
+++ b/collects/scribblings/guide/guide.scrbl
@@ -50,6 +50,8 @@ precise details to @|MzScheme| and other reference manuals.
 
 @include-section["macros.scrbl"]
 
+@include-section["languages.scrbl"]
+
 @include-section["performance.scrbl"]
 
 @include-section["running.scrbl"]
diff --git a/collects/scribblings/guide/languages.scrbl b/collects/scribblings/guide/languages.scrbl
new file mode 100644
index 0000000000..0d4cb2a9ed
--- /dev/null
+++ b/collects/scribblings/guide/languages.scrbl
@@ -0,0 +1,37 @@
+#lang scribble/doc
+@(require scribble/manual
+          "guide-utils.ss")
+
+@title[#:tag "languages" #:style 'toc]{Creating Languages}
+
+The @tech{macro} facilities defined in the preceding chapter let a
+programmer define syntactic extensions to a language, but the
+expressiveness of a macro is limited in two ways:
+
+@itemlist[
+
+ @item{a macro cannot restrict the syntax available in its context or
+       change the meaning of surrounding forms; and}
+
+ @item{a macro can extend the syntax of a language only within the
+       parameters of the language's lexical conventions, such as using
+       parentheses to group the macro name with its subforms and using
+       the core syntax of identifiers, keywords, and literals.}
+
+]
+
+@guideother{The distinction between the @tech{reader} and
+@tech{expander} layer is introduced in @secref["lists-and-syntax"].}
+
+That is, a macro can only extend a language, and it can do so only at
+the @tech{expander} layer. Racket offers additional facilities for
+defining a starting point of the @tech{expander} layer, for extending
+the @tech{reader} layer, for defining the starting point of the
+@tech{reader} layer, and for packaging a @tech{reader} and
+@tech{expander} starting point into a conveniently named language.
+
+@local-table-of-contents[]
+
+@;------------------------------------------------------------------------
+@; @include-section["module-languages.scrbl"]
+@include-section["reader-extension.scrbl"]
diff --git a/collects/scribblings/guide/reader-extension.scrbl b/collects/scribblings/guide/reader-extension.scrbl
new file mode 100644
index 0000000000..9f90e46540
--- /dev/null
+++ b/collects/scribblings/guide/reader-extension.scrbl
@@ -0,0 +1,225 @@
+#lang scribble/doc
+@(require scribble/manual
+          scribble/bnf
+          scribble/eval
+          (for-label racket/match
+                     syntax/readerr)
+          "guide-utils.ss"
+          (for-syntax racket/base
+                      syntax/strip-context))
+
+@(define-syntax (racketmodfile stx)
+   (syntax-case stx ()
+    [(_ file)
+     (with-syntax ([(content ...)
+                    (call-with-input-file* (syntax-e #'file)
+                     (lambda (in)
+                       (read-bytes 6 in)
+                       (port-count-lines! in)
+                       (let loop ()
+                         (let ([v (read-syntax (object-name in) in)])
+                           (if (eof-object? v) 
+                               null 
+                               (cons (replace-context #'file v) 
+                                     (loop)))))))])
+        #'(racketmod content ...))]))
+
+@title[#:tag "hash-reader"]{Reader Extensions}
+
+The @tech{reader} layer of the Racket language supports a
+@litchar{#reader} syntax for allowing an external processor to parse
+raw bytes into forms to be consumed by the @tech{expander} layer.
+The syntax of @litchar{#reader} is
+
+@racketblock[@#,(BNF-seq @litchar{#reader} @nonterm{module-path} @nonterm{reader-specific})]
+
+where @nonterm{module-path} names a module that provides
+@racketidfont{read} and @racketidfont{read-syntax} functions. The
+@nonterm{module-path} itself is written with the reader syntax put in
+place by its context. The @nonterm{reader-specific} part is a sequence
+of characters that is parsed as determined by the @racketidfont{read}
+and @racketidfont{read-syntax} functions that are exported by the
+module named through @nonterm{module-path}.
+
+For example, suppose that file @filepath{five.rkt} contains
+
+@racketmod[
+racket/base
+
+(provide read read-syntax)
+
+(define (read in) (list (read-string 5 in)))
+(define (read-syntax src in) (list (read-string 5 in)))
+]
+
+Then, the program
+
+@racketmod[
+racket/base
+
+'(1 @#,(elem @racketmetafont{#reader} @racket["five.rkt"] @tt{23456} @racket[7]) 8)
+]
+
+is equivalent to
+
+@racketmod[
+racket/base
+
+'(1 ("23456") 7 8)
+]
+
+because the @racketidfont{read} and @racketidfont{read-syntax}
+functions of @filepath{five.rkt} both read five characters from the
+input stream and put them into a string and then a list. The reader
+functions from @filepath{five.rkt} are not obliged to follow Racket
+lexical conventions and treat the continuous sequence @litchar{234567}
+as a single number. Since only the @litchar{23456} part is consumed by
+@racketidfont{read} or @racketidfont{read-syntax}, the @litchar{7}
+remains to be parsed in the usual racket way. Similarly, the reader
+functions from @filepath{five.rkt} are not obliged to treat spaces as
+whitespace, and
+
+@racketmod[
+racket/base
+
+'(1 @#,(elem @racketmetafont{#reader} @racket["five.rkt"] @hspace[1] @tt{2345} @racket[67]) 8)
+]
+
+is equivalent to
+
+@racketmod[
+racket/base
+
+'(1 (" 2345") 67 8)
+]
+
+since the first character immediately after @racket["five.rkt"] is a
+space.
+
+A @litchar{#reader} form can be used in the @tech{REPL}, too:
+
+@interaction[
+(eval:alts @#,(elem @racketmetafont{#reader}@racket["five.rkt"]@tt{abcde}) #reader"five.rkt"abcde)
+]
+
+@; ----------------------------------------------------------------------
+
+@section{Source Locations}
+
+The difference between @racketidfont{read} and
+@racketidfont{read-syntax} is that @racketidfont{read} is meant to be
+used for data like the Racket @racket[read] function, while
+@racketidfont{read-syntax} is meant to be used to parse programs. More
+precisely, the @racketidfont{read} function will be used when the
+enclosing stream is being parsed by the Racket @racket[read], and
+@racketidfont{read-syntax} is used when the enclosing stream is being
+parsed by the Racket @racket[read-syntax] function. Nothing requires
+@racketidfont{read} and @racketidfont{read-syntax} to parse input in
+the same way, though they normally should.
+
+Although the @racketidfont{read-syntax} function can return the same
+kind of value as @racketidfont{read}, it should normally return a
+@tech{syntax object} that connects the parsed expression with source
+locations. Unlike the @filepath{five.rkt} example, the
+@racketidfont{read-syntax} function is typically implemented directly,
+and then @racketidfont{read} can use @racketidfont{read-syntax} and
+strip away source information.
+
+The following @filepath{arith.rkt} module implements that reader to
+parse simple infix arithmetic expressions into Racket forms. For
+example, @litchar{1*2+3} parses into the Racket form @racket[(+ (* 1
+2) 3)]. Single-letter variables can appear in the expression. The
+implementation uses @racket[port-next-location] to obtain the current
+source location, and it uses @racket[datum->syntax] to turn raw values
+into @tech{syntax objects}.
+
+@racketmodfile["arith.rkt"]
+
+If the @filepath{arith.rkt} reader is used in an expression position,
+then its parse result will be treated as a Racket expression. If it is
+used in a quoted form, however, then it just produces a number or a
+list:
+
+@interaction[
+(eval:alts @#,(elem @racketmetafont{#reader}@racket["arith.rkt"]@hspace[1]@tt{1*2+3}) #reader"arith.rkt" 1*2+3 )
+(eval:alts '@#,(elem @racketmetafont{#reader}@racket["arith.rkt"]@hspace[1]@tt{1*2+3}) '#reader"arith.rkt" 1*2+3 )
+]
+
+The @filepath{arith.rkt} reader could also be used in positions that
+make no sense. Since the @racketidfont{read-syntax} implementation
+tracks source locations, syntax errors can at least refer to parts of
+the input in terms of their original locations (at the beginning of
+the error message):
+
+@interaction[
+(eval:alts (let @#,(elem @racketmetafont{#reader}@racket["arith.rkt"]@hspace[1]@tt{1*2+3}) 8)
+           (eval (parameterize ([read-accept-reader #t])
+                   (read-syntax 'repl (let ([p @open-input-string{(let #reader"arith.rkt" 1*2+3 8)}])
+                                        (port-count-lines! p)
+                                        p)))))
+]
+
+@; ----------------------------------------------------------------------
+
+@section{Readtables}
+
+A reader extension's ability to parse input characters in an arbitrary
+way can be powerful, but many cases of lexical extension call for a
+less general but more composable approach. In much the same way that
+the @tech{expander} level of Racket syntax can be extended through
+@tech{macros}, the @tech{reader} level of Racket syntax can be more
+composably extended through a @deftech{readtable}.
+
+The Racket reader is a recursive-descent parser, and the
+@tech{readtable} maps characters to parsing handlers. For example, the
+default readtable maps @litchar{(} to a handler that recursively
+parses subforms until it finds a @litchar{)}. The
+@racket[current-readtable] @tech{parameter} determines the
+@tech{readtable} that is used by @racket[read] or
+@racket[read-syntax]. Rather than parsing raw characters directly, a
+reader extension can install an extended @tech{readtable} and then
+chain to @racket[read] or @racket[read-syntax].
+
+@guideother{See @secref["parameterize"] for an introduction to
+@tech{parameters}.}
+
+The @racket[make-readtable] function constructs a new @tech{readtable}
+as an extension of an existing one. It accepts a sequence of
+specifications in terms of a character, a type of mapping for the
+character, and (for certain types of mappings) a parsing
+procedure. For example, to extend the readtable so that @litchar{$}
+can be used to start and end infix expressions, implement a
+@racket[parse-dollar] function and use:
+
+@racketblock[
+(make-readtable (current-readtable)
+                #\$ 'terminating-macro read-dollar)
+]
+
+The protocol for @racket[read-dollar] requires the function to accept
+different numbers of arguments depending on whether it is being used
+in @racket[read] or @racket[read-syntax] mode. In @racket[read] mode,
+the parser function is given two arguments: the character that
+triggered the parser function and the input port that is being
+read. In @racket[read-syntax] mode, the function must accept four
+additional arguments that provide the source location of the
+character.
+
+The following @filepath{dollar.rkt} module defines a
+@racket[parse-dollar] function in terms of the @racketidfont{read} and
+@racketidfont{read-syntax} functions provided by @filepath{arith.rkt},
+and it puts it together with new @racketidfont{read} and
+@racketidfont{read-syntax} functions that install the readtable can
+chain to Racket's @racket[read] or @racket[read-syntax]:
+
+@racketmodfile["dollar.rkt"]
+
+With this reader extension, a single @racketmetafont{#reader} can be
+used at the beginning of an expression to enable multiple uses of
+@litchar{$} to switch to infix arithmetic:
+
+@interaction[
+(eval:alts @#,(elem @racketmetafont{#reader}@racket["dollar.rkt"]@hspace[1]
+                    @racket[(let ([a @#,tt{$1*2+3$}][b @#,tt{$5/6$}]) $a+b$)])
+           #reader"dollar.rkt" (let ([a $1*2+3$][b $5/6$]) $a+b$))
+]
diff --git a/collects/scribblings/guide/truth.scrbl b/collects/scribblings/guide/truth.scrbl
index db5c80a0ab..5da9755628 100644
--- a/collects/scribblings/guide/truth.scrbl
+++ b/collects/scribblings/guide/truth.scrbl
@@ -224,10 +224,10 @@ streams. Instead, the syntax is determined by two layers:
 
 @itemize[
 
- @item{a @defterm{read} layer, which turns a sequence of characters
+ @item{a @deftech{reader} layer, which turns a sequence of characters
        into lists, symbols, and other constants; and}
 
- @item{an @defterm{expand} layer, which processes the lists, symbols,
+ @item{an @deftech{expander} layer, which processes the lists, symbols,
        and other constants to parse them as an expression.}
 
 ]
diff --git a/collects/scribblings/reference/readtables.scrbl b/collects/scribblings/reference/readtables.scrbl
index 9d0cc3bc7d..562b812043 100644
--- a/collects/scribblings/reference/readtables.scrbl
+++ b/collects/scribblings/reference/readtables.scrbl
@@ -316,7 +316,8 @@ character and the @racket[#f] readtable.}
 
 (define tuple-readtable+
   (make-readtable tuple-readtable
-                  #\* 'terminating-macro (lambda a (make-special-comment #f))
+                  #\* 'terminating-macro (lambda a 
+                                           (make-special-comment #f))
                   #\_ #\space #f))
 (parameterize ([current-readtable tuple-readtable+])
   (read (open-input-string "< * 1 __,__  2 __,__ * \"a\" * >")))